India’s pharmaceutical industry is preparing a broad strategy to protect itself from possible tariff increases as US President Donald Trump intensifies his trade actions.
Currently, drug formulations and active pharmaceutical ingredients (APIs) from India are not affected by the latest 25% tariff hike under the US’s ongoing Section 232 investigation. However, the industry is staying cautious.
“The US has temporarily excluded pharmaceuticals from the new tariffs,” said Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance. He explained that generic drugs, which are essential for affordable healthcare in the US, already operate on very slim profit margins, so even small cost increases can hurt.
This exemption is not permanent. The Section 232 investigation—meant to determine whether pharma imports pose a national security threat—is expected to conclude by December 27, 2025, with the final decision due by March 2026.
How Indian Pharma Companies Are Responding
Indian drugmakers are adopting multiple strategies such as:
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Geographical diversification
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Strengthening supply chains
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Acquiring companies in the US
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Hiring consultants to prepare for future risks
Examples:
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Aurobindo Pharma bought US-based Lannett Company for $250 million.
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Syngene International purchased its first US biologics plant for $36.5 million.
These deals are aimed at building a manufacturing presence in the US, offering protection from future tariffs. -
Natco Pharma, heavily reliant on the US market, is diversifying. It recently bought a 35.75% stake in South Africa’s Adcock Ingram Holdings Ltd for around Rs 2,000 crore, aiming to grow in Africa.
“We want to expand globally and focus on our core business,” said CEO Rajeev Nannapaneni.
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Alembic Pharmaceuticals, which earns over 30% of its revenue from the US, is working on backward integration, cutting costs, and selective acquisitions.
“There’s no guidebook for this. We’re building resilience by sourcing more from India and improving cost efficiency,” said MD Pranav Amin.
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Companies without US manufacturing are turning to contract manufacturers like Senores Pharmaceuticals, which operates entirely in the US and is protected from tariffs.
However, producing in the US is costly, especially for generics companies that usually work with 10–15% margins.
Role of Consultants
Consulting firms like Oliver Wyman are helping Indian pharma companies plan for potential disruptions.
“We help clients prepare scenarios so they know how to react,” said Sumit Sharma, a partner at the firm.
They’re advising clients on:
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China+1 strategies (sourcing beyond China)
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Digital tools to boost manufacturing efficiency
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Mergers and acquisitions for diversification and growth
Industry Concerns in the US
The Association for Accessible Medicines (AAM) has warned that imposing tariffs on generics will:
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Increase drug prices
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Worsen shortages
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Threaten low-margin drugs
In 2023, generics made up 90% of US prescriptions and saved the healthcare system $445 billion.
“Tariffs on generics would drive up prices, create shortages, and discourage companies from setting up US manufacturing,” said AAM.
India-US Pharma Trade
India exported $8.73 billion worth of pharmaceuticals to the US in 2024, making up 31% of its total pharma exports. Indian generics account for nearly half of all drugs covered by Medicare and private insurance in the US.
